Limited Liability Partnership (LLP)

What is an LLP??

A Limited Liability Partnership firm (LLP) is a hybrid structure between a partnership firm & a private limited company where the business is carried out in a corporate framework, guided by terms of the mutually adopted partnership deed..

What are the advantages of registering as an LLP over general partnership firms??

a. Liability- In a general partnership firm, partners are personally liable for debts of the business which means that even their personal property may be used to settle the firm’s debts. Whereas, the liability of partners is limited in the case of an LLP. b. Immunity against wrongdoings of other partners- Under the LLP structure, partners are not responsible for negligence or misconduct of other partners whereas, in general, partnership firms, partners can be held responsible. .

Does the Income Tax Act treat partnership firms and LLPs differently??

Both general partnerships and LLPs are taxed at a flat rate of 30%..

What is the minimum capital requirement for LLPs??

There is no minimum capital contribution requirement. It can be registered even with Rs. 100 as a total capital contribution..

What is the audit requirement for LLP??

a. Accounts of an LLP are required to be audited when the turnover is Rs. 40 lakh or more or when the total capital contribution is Rs. 25 lakh or more. b. The auditor of an LLP is appointed annually by the designated partners. c. The first auditor is appointed before the end of the financial year. Subsequent appointment or reappointment of the auditors is made one month before the closing of the financial year by the designated partners. .

My details on my documents have a difference. Can I still incorporate my company using them??

You will need to have exactly the same details on all your documents to incorporate your LLP..